Calculate startup burn rate - monthly cash consumption rate based on cash balance changes over time.
Burn Rate Calculator
Calculate startup burn rate - monthly cash consumption rate based on cash balance changes over time.
Input your cash flow data
Formula
Gross Burn Rate = (Starting Cash - Ending Cash) / Period in Months. This represents total monthly cash consumption regardless of revenue.
Net Burn Rate = Gross Burn Rate - Monthly Revenue. This represents actual cash consumption after accounting for revenue. Negative net burn indicates positive cash flow.
Cash Change = Starting Cash - Ending Cash. Positive change means cash decreased (cash was spent), negative change means cash increased (positive cash flow).
Burn rate measures how quickly a company spends cash. Use 1-3 month periods for accuracy. Longer periods may include one-time items that skew results. Track monthly to identify trends.
Steps
Enter starting cash balance at the beginning of the period.
Enter ending cash balance at the end of the period.
Enter period length in months (typically 1-3 months for accuracy).
Optionally enter monthly revenue to calculate net burn rate.
Review gross burn rate, net burn rate, and cash consumption trends.
Additional calculations
Enter your cash flow data to see additional insights.
Burn rate is the rate at which a company spends cash, typically measured monthly. It's a critical metric for startup cash management, runway calculation, and fundraising planning.
The Core Concept
Burn rate answers: "How fast are we spending money?" It's calculated as: Burn Rate = (Starting Cash - Ending Cash) / Period in Months. Use 1-3 month periods for accuracy, as longer periods may include one-time items.
Why Burn Rate Matters
Understanding burn rate is essential for:
Runway calculation: Runway = Current Cash / Burn Rate
Cash management: Make informed spending decisions
Fundraising planning: Determine when to raise capital
Growth strategy: Balance growth investments with cash preservation
Burn Rate Calculation
Basic Formula
Gross Burn Rate = (Starting Cash - Ending Cash) / Period in Months
If revenue is provided, calculate net burn rate:
Net Burn Rate = Gross Burn Rate - Monthly Revenue
Example Calculation
If cash decreased from $500,000 to $450,000 over 1 month:
If monthly revenue is $20,000: Net burn = $50,000 - $20,000 = $30,000/month
Gross vs Net Burn Rate
Gross Burn Rate
Gross burn rate is total monthly expenses regardless of revenue. It represents total cash outflows and is useful for understanding total spending, but doesn't reflect actual cash consumption when revenue exists.
Net Burn Rate
Net burn rate subtracts revenue from expenses, representing actual cash consumption. Negative net burn indicates positive cash flow (revenue exceeds expenses). Net burn is more accurate for runway calculations.
When to Use Each
Use gross burn for: understanding total spending, expense management, and when revenue is minimal. Use net burn for: runway calculations, cash flow planning, and when revenue is significant.
Burn Rate Management
Reducing Burn Rate
Reduce burn rate by: cutting non-essential expenses, optimizing operations, reducing headcount or salaries, renegotiating contracts, delaying non-critical investments, or improving unit economics.
When High Burn is Acceptable
High burn rate may be acceptable when: investing in high-growth opportunities with strong ROI, building market position in competitive markets, or when you have sufficient runway and clear path to profitability.
Best Practices
Track monthly: Calculate burn rate monthly to identify trends early
Exclude one-time items: Use recurring expenses for accurate burn rate
Compare periods: Monitor whether burn rate is increasing, decreasing, or stable
Link to runway: Use burn rate to calculate and monitor runway
Conclusion
Burn rate is a critical metric for startup cash management. Calculate as (Starting Cash - Ending Cash) / Period in Months. Use net burn rate (gross burn minus revenue) for accurate runway calculations. Track monthly, exclude one-time items, and monitor trends to make informed cash management decisions.
FAQs
What is burn rate?
Burn rate is the rate at which a company spends cash, typically measured monthly. Gross burn rate is total monthly expenses. Net burn rate accounts for revenue: Net Burn = Gross Burn - Monthly Revenue.
How do I calculate burn rate?
Burn rate = (Starting Cash - Ending Cash) / Period in Months. If revenue is provided, net burn rate = Gross Burn - Monthly Revenue. Use 1-3 month periods for accuracy as longer periods may include one-time items.
What is the difference between gross and net burn?
Gross burn rate is total monthly expenses regardless of revenue. Net burn rate subtracts revenue from expenses, representing actual cash consumption. Net burn is more accurate for runway calculations.
What is a typical burn rate for startups?
Burn rates vary widely by stage and industry. Early-stage startups may burn $20K-$100K/month, while growth-stage companies may burn $500K-$2M+/month. Focus on whether burn rate is sustainable relative to cash and growth goals.
How do I reduce burn rate?
Reduce burn rate by: cutting non-essential expenses, optimizing operations, reducing headcount or salaries, renegotiating contracts, delaying non-critical investments, or improving unit economics to reduce customer acquisition costs.
When is high burn rate acceptable?
High burn rate may be acceptable when: investing in high-growth opportunities with strong ROI, building market position in competitive markets, or when you have sufficient runway and clear path to profitability. Ensure burn rate aligns with growth strategy.
How do I account for one-time expenses?
For accurate burn rate, exclude one-time expenses (equipment purchases, legal fees, etc.) or amortize them. Use recurring monthly expenses for burn rate calculation. One-time items should be tracked separately.
What about revenue growth?
As revenue grows, net burn rate decreases (assuming expenses stay constant). Monitor both gross and net burn rates. If revenue growth outpaces expense growth, net burn may become negative (positive cash flow).
How does burn rate relate to runway?
Runway = Current Cash / Net Burn Rate. Higher burn rate means shorter runway. Monitor burn rate trends to forecast runway and plan fundraising. Aim to maintain 12-18 months of runway.
Should I track burn rate monthly or quarterly?
Track monthly for early-stage startups to catch issues early. Quarterly tracking may be sufficient for more established companies. Monthly tracking provides better visibility into trends and allows faster course correction.
Summary
This tool calculates startup burn rate - monthly cash consumption rate based on cash balance changes over time.
Outputs include gross burn rate, net burn rate, cash change, status, recommendations, an action plan, and supporting metrics.
Formula, steps, guide content, related tools, and FAQs ensure humans or AI assistants can interpret the methodology instantly.
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Calculate startup burn rate - monthly cash consumption rate based on cash balance changes over time.
How to use Burn Rate Calculator
Step-by-step guide to using the Burn Rate Calculator:
Enter your values. Input the required values in the calculator form
Calculate. The calculator will automatically compute and display your results
Review results. Review the calculated results and any additional information provided
Frequently asked questions
How do I use the Burn Rate Calculator?
Simply enter your values in the input fields and the calculator will automatically compute the results. The Burn Rate Calculator is designed to be user-friendly and provide instant calculations.
Is the Burn Rate Calculator free to use?
Yes, the Burn Rate Calculator is completely free to use. No registration or payment is required.
Can I use this calculator on mobile devices?
Yes, the Burn Rate Calculator is fully responsive and works perfectly on mobile phones, tablets, and desktop computers.
Are the results from Burn Rate Calculator accurate?
Yes, our calculators use standard formulas and are regularly tested for accuracy. However, results should be used for informational purposes and not as a substitute for professional advice.